New legal forms to aid start-ups in deal-making

Chief Justice Sundaresh Menon launched the Venture Capital Investment Model Agreements during the Singapore Academy of Law's 30th anniversary dinner on Oct 23, 2018.
Chief Justice Sundaresh Menon launched the Venture Capital Investment Model Agreements during the Singapore Academy of Law's 30th anniversary dinner on Oct 23, 2018.ST PHOTO: KHALID BABA

Standardised documents to make venture capital investment process 'easier and faster'

Start-ups and venture capitalists will find it easier to draw up investment contracts through a new suite of model agreements designed to facilitate the process.

Developed by the Singapore Academy of Law (SAL) and the Singapore Venture Capital and Private Equity Association (SVCA), the standardised documents will reduce the need for companies to spend time and money on preparing and negotiating venture capital investments from scratch, particularly in early-stage financing.

Chief Justice Sundaresh Menon, who launched the Venture Capital Investment Model Agreements yesterday, said the initiative "complements our national efforts to foster the growth and vibrancy of the venture capital ecosystem in Singapore".

He said he expected the model agreements will play a key role in driving the adoption of Singapore law by the venture capital industry for early-stage financing transactions, as they will be governed by the law here. Any disputes that arise will also be resolved in Singapore.

The initiative comes as venture capital investments into South-east Asia totalled US$2.7 billion (S$3.7 billion) last year, and US$3.2 billion in the first eight months of this year, according to the SVCA.

It was conceived by Mr Gregory Tan, managing director of legal and regulatory at Temasek and a member of the SAL's Promotion of Singapore Law Committee, who was inspired by a similar initiative in the United States, said CJ Menon, at a conferment ceremony for former Court of Appeal Judge Chao Hick Tin.

Mr Tan led a working group of lawyers from WongPartnership, Allen & Gledhill, and Clifford Chance in consultation with stakeholders, including more than 30 venture capitalists, domestic and international law firms and Singapore agencies, "to ensure that the model agreements reflect market consensus and can genuinely be said to be neutral", said Mr Menon.

 

Founder and chief executive of software company PatSnap Jeffrey Tiong said the introduction of such standard form contracts would make the investment process "simpler, faster and more cost-efficient". The model agreements, which currently comprise legal documents for pre-Series A and Series A rounds of financing, can be downloaded from Singapore Law Watch and the SVCA's website.

More form documents will be added when they are needed by the venture capital industry, said the SAL.

A version of this article appeared in the print edition of The Straits Times on October 24, 2018, with the headline 'New legal forms to aid start-ups in deal-making'. Print Edition | Subscribe